Santana Textiles has created just 38 jobs at its Texas mill

Santana Textiles has created just 38 jobs at its Texas mill

An economic incentive programme designed to draw new businesses to Texas has been criticised by auditors for numerous oversights - including a $1.65m grant to Brazil's Santana Textiles for a denim plant that has failed to deliver on its promises.

South America's largest denim fabric manufacturer was awarded the funding from the Texas Enterprise Fund in 2008 to help build its first mill in the US. The company said it had selected Edinburg, Texas because of its proximity to cotton growers, as well as to key denim markets in Mexico and Los Angeles, and was expected to create 800 new jobs at the facility.

But five years on, it transpires that just $800,000 has been given to the company - and the state has fined Santana $280,370 in "clawback" penalties for failing to comply with requirements set out in the award agreement. The number of jobs forecast has also dropped by more than half to 359, with the audit finding that just 38 jobs had been created at the end of 2012.

Overall, the Texas Enterprise Fund was criticised for control weaknesses that meant: "It was not always possible to determine whether award decisions were supported, or to determine the number of jobs that recipients of awards from the Texas Enterprise Fund have created."

The audit added: "The absence of an adequate control structure impaired the [Office of the Governor's] ability to consistently administer the awarding, award agreement establishment, monitoring and award agreement termination, and reporting functions for the Texas Enterprise Fund."